Chapter 4: Ethics and Social Responsibilities

Ethics over Time

-As ethical beliefs change over time, some people may begin to question whether existing laws that make specific behaviors illegal are still appropriate. -While ethical beliefs lead to the development of laws and regulations to prevent certain behaviors or encourage other, laws themselves change or even disappear as ethical beliefs change.

Ethical Behavior

-Increases efficiency and effectiveness of production and trade. -Increase company performance -Increases national standard of living, well-being, and prosperity.

Unethical Behavior

-Reduces efficiency and effectiveness of production and trade -Reduces company performance -Reduces national standard of living, well-being, and prosperity.

Managers

-a vital stakeholder group because they are responsible for using a company's financial, capital, and human resources to increase its performance and thus its stock price. -Managers have a claim on an organization because they bring to it their skills, expertise, and experience. -they must be motivated and given incentives to work hard in the interest of stockholders. Their behavior must also be scrutinized to ensure they do not behave illegally or unethically, pursuing goals that threaten stockholders and the company interest.

Rules for Ethical Decision Making

-when a stakeholder perspective is taken, questions on company ethics abound. -when companies act ethically, their stakeholders support them. -when making business decisions, managers must consider the claims of all stakeholders.

Ethics Ombudsperson

A manager responsible for communicating and teaching ethical standards to all employees and monitoring their conformity to those standards

Social Responsibility Four Approaches

Proactive, Accommodative, Defensive, and Obstructionist (Hight --> Low)

Four main source of Managerial Ethics

Societal Ethics Occupational Ethics Individual Ethics Organizational Ethics

Ethics and Laws

The relationship between ethics and laws, it is important to understand that neither laws or ethics are fixed principles that do not change over time. Ethical beliefs change as time passes; and as they do so, laws change to reflect the changing ethical beliefs of society.

Four Ethical Rules

Utilitarian Rule Moral Right Rule Justice Rule Practical Rule

Accommodative Approach

acknowledge the need to support social responsibility.

Proactive Approach

actively embrace the need to behave in socially responsible ways.

Justice Rule

an ethical decision distributes benefits and harms among people and groups in a fair, equitable, and impartial way.

Practical Rule

an ethical decision is one that a manager has no hesitation or reluctance about communicating to people outside the company because the typical person in a society would think it is acceptable.

Moral Right Rule

an ethical decision is one that best maintains and protects the fundamental or inalienable rights and privileges of the people affected by it.

Individual Ethics

are personal standards and values that determine how people view their responsible to other people and groups and thus how they should act in situations when their own self-interests are at stake.

Societal Ethics

are standards that govern how members of a society should deal with one another i matters involving issues such as fairness, justice, poverty, and the rights of the individual.

Occupational Ethics

are standards that govern how members of profession, trade, or craft should conduct themselves when performing work-related activities.

Organizational Ethics

are the guiding practices and beliefs through which a particular company and its managers view their responsibility toward their stakeholders.

Obstructionist Approach

companies and their managers chose not to behave in a socially responsible way. (Instead they behave unethically and ofter illegally and do all they can to prevent knowledge of their behavior from reaching other organizational stakeholders and society at large.)

Stockholders

have a claim on the company because when they buy its stock or share they become owners. These people are interested in hoe the company operates because they want to maximize their return on investment. Therefore, they watch the company and its managers closely to ensure that management is wiring diligently to increase the company's profitability.

Society Summary

in a complex, diverse society, stakeholders, and people in general, need to recognize they are part of a larger social group. How they make decisions and act not only affects them personally but also affects the lives of many other people.

Defensive Approach

indicates at least some commitment to ethical behavior

Utilitarian Rule

is that an ethical decision is a decision that produces the greatest good for the greatest number of people.

Trust

is the willingness of one person or group to have faith or confidence in the goodwill of another person, even through this puts them at risk (because the other might act in a deceitful way.)

Community

refers to physical locations like towns or cities or social milieus like ethnic neighborhoods in which companies are located.

Stakeholder

supply a company with its productive resources; as a result, they have a claim on and a stake in the company.

Reputation

the esteem or high repute that people or organizations gain when they behave ethically, is an important asset.

Ethics

the inner guiding moral principles, values, and beliefs that people use to analyze or interpret a situation and then decide what is the right or appropriate way to behave.

Ethical Dilemmas

the quandary of people themselves in when they have to decide if they should act in a way that might help another person or group and it the right thing to do, even thought doing so might go against their own self-interest.